Payment incentives and the use of higher-cost drugs: A retrospective cohort analysis of intravenous iron in the medicare population

OBJECTIVES: Medicare Part B payment methods incentivize the use of more expensive injectable and infused drugs. We examined prescribing patterns in the context of intravenous (IV) iron, for which multiple similarly safe and efficacious formulations exist, with wide variations in price. STUDY DESIGN: We conducted a retrospective cohort analysis of IV iron utilization and payment in the Medicare population between 2015 and 2017. METHODS: This analysis used a national, random 20% sample of Medicare fee-for-service beneficiaries with Part B claims for IV iron between January 2015 and December 2017—a period before, during, and after a national shortage of iron dextran. This sample included 66,710 Medicare fee-for-service beneficiaries with at least 1 Part B claim for IV iron. RESULTS: The greatest increase in utilization occurred in the most expensive iron formulation, ferric carboxymaltose; its market share rose from 27.4% of use in 2015 to 47.7% in 2017. The use of a less expensive formulation, iron dextran, decreased from 26.7% to 18.7% over the same period. An alternative payment model in Maryland hospitals was associated with markedly less utilization of ferric carboxymaltose, accounting for 4.7% of IV iron utilization in Maryland hospitals. CONCLUSIONS: There was an increase in the dispensing of a higher-priced IV iron formulation associated with a shortage of a less expensive drug that persisted once the shortage ended. These findings in IV iron have broader implications for Part B drug payment policy because the price of the drug determines the physician and health system payment.